/pdf/the-theory-of-industrial-organization-19bejph0ej.pdf

The Theory of Industrial Organization

A new era of theoretical computer science addresses fundamental problems about auctions, networks, and human behavior.

http://www.maths.lse.ac.uk/Personal/stengel/TEXTE/agt-stengel.pdf

Algorithmic Game Theory

This paper provides an elementary, non-technical, survey of auction theory, by introducing and describing some of the critical papers in the subject. (The most important of these are reproduced in a companion book, The Economic Theory of Auctions, Paul Klemperer (ed.), Edward Elgar (pub.), forthcoming.); We begin with the most fundamental concepts, and then introduce the basic analysis of optimal auctions, the revenue equivalence theorem, and marginal revenues. Subsequent sections address risk-aversion, affiliation, asymmetries, entry, collusion, multi-unit auctions, double auctions, royalties, incentive contracts, and other topics. Appendices contain technical details, some simple worked examples, and a bibliography for each section.

/pdf/auction-theory-a-guide-to-the-literature-3i2uohzm74.pdf

Auction Theory: A Guide to the Literature

The United Nations Children's Fund, or UNICEF, was originally created to provide relief for children in countries devastated by the destruction of World War II. After 1950, UNICEF turned to focus on general programs for the improvement of children's welfare worldwide, and in 1965, it was awarded the Nobel Prize for Peace for its humanitarian efforts. The organization concentrates on areas in which relatively small expenditures can have a significant impact on the lives of the most disadvantaged children in developing countries, such as the prevention and treatment of disease, child healthcare, malnutrition, illiteracy, and other welfare services.

The United Nations Children's Fund

The extent to which member states transpose EU directives in a timely fashion is often argued to be strongly associated with the general effectiveness of national bureaucracies. But what kind of institutional solutions ensure better performance? This paper examines the patterns and effects of departmental oversight across 28 ministries in Estonia, Hungary, Poland and Slovenia. In mapping the strength of oversight, it relies on around 90 structured interviews regarding the rules-in-use on transposition planning, legal review and monitoring of deadlines. The analysis of the impact of departmental oversight is based on an original dataset of over 300 directives with transposition deadlines between January 2005 and December 2008.

On the european union

We study competitive procurement administered by a corrupt agent who is willing to manipulate his evaluation of contract proposals in exchange for bribes. With complete information and no corruption, the efficient firm will win the contract for sure. If the agent is corrupt and has large manipulation power, however, bribery makes it costly for the efficient firm to secure a sure win, so in equilibrium the efficient firm loses the contract with positive probability. The optimal scoring rule for the buyer deemphasizes quality relative to price and does not fully handicap, and may even favor, the efficient firm.

/pdf/competitive-procurement-with-corruption-3wux1zcxkk.pdf

Competitive procurement with corruption

We study the competition between two owners of identical goods who wish to sell them to a pool of potential buyers. The sellers compete simultaneously setting reserve prices for their second price sealed bid auctions. Upon observing the set reserve prices, the buyers decide simultaneously in which auction to bid. We show that this game has (at least) one equilibrium and that all equilibria are inefficient: reserve prices are not driven to zero (cost). We also discuss where and why the parallel between optimal auction design and optimal pricing in the case of monopoly breaks down for oligopoly.

Imperfect competition in auction designs

Short-lived agents want to predict a random variable 
$\theta $
 and have to decide how much effort to devote to collect private information and consequently how much to rely on public information. The latter is just a noisy average of past predictions. It is shown that costly information acquisition prevents an unbounded accumulation of public information if (and only if) the marginal cost to acquire information is positive at zero 
$(C^\prime (0) > 0)$
 . When 
$C^\prime (0) = 0$
 public precision at period n, 
$\tau_n$
 , tends to infinity with n but the rate of convergence of public information to 
$\theta $
 is slowed down with respect to the exogenous information case. At the market outcome agents acquire too little private information. This happens either with respect to a (decentralized) first best benchmark or, for n large, with respect to a (decentralized) second best benchmark. For high discount factors the limit point of market public precision always falls short of the welfare benchmarks whenever 
$C^\prime (0) > 0$
 . In the extreme, as the discount factor tends to one public precision tends to infinity in the welfare-optimal programs while it remains bounded at the market solution. Otherwise, if 
$C^\prime (0) = 0$
 public precision accumulates in an unbounded way both at the first and second best solutions. More public information may hurt at either the market or second best solutions.

Social learning and costly information acquisition

Trade liberalization, environmental policy, and welfare

We consider a model of bribery and favoritism in a sealed-bid first-price procurement auction. The auctioneer can award the contract to a dishonest supplier at the low bid of an honest supplier. We examine the equilibrium bidding functions of both suppliers when it is common knowledge that the dishonest supplier can bribe the auctioneer. Both efficient and inefficient bribes can arise and the resulting allocative distortion differs from the distortions in a first-price auction or an optimal auction. The expected price paid by the buyer is generally higher with bribery, but when efficient bribes occur, there can be cases in which bribery results in a lower expected price. We also examine the incentives for cost-reducing investment by the suppliers and find that bribery results in a lower industry capacity than the social optimum. Finally, we examine upfront bribes in which the suppliers compete to be favored by the auctioneer and find that the stronger supplier will pay a larger bribe than the weaker supplier.

Roberto Burguet

Papers

Competitive procurement with corruption

Imperfect competition in auction designs

Social learning and costly information acquisition

Trade liberalization, environmental policy, and welfare

Bribery and Favoritism by Auctioneers in Sealed Bid Auctions